Nissan now switching focus to domestic competitiveness

by Setsuko Kamiya

Looking back on a year in which Nissan Motor Co. appears to have finally stemmed its downward slide, President Carlos Ghosn said that regaining competitiveness in the domestic market will be the automaker’s priority for the coming year.

To achieve this goal, which effectively means regaining a market share that has steadily ebbed since its peak of 34 percent in 1974, Ghosn said Nissan will introduce new products with a leaner cost structure and clearer brand image as well as boost the efficiency of its marketing and distribution system.

A total of 22 new models are scheduled to be launched worldwide during the drastic three-year restructuring plan Ghosn unveiled in October 1999, but only two so far have been released, both in Japan.

“What you have seen so far in the results of the Nissan Revival Plan is part of the cost reduction plan, which was more visible. You will see much more of the plan related to growth in 2001 and much more (than that) in 2002,” Ghosn said in a recent interview.

Nissan reported its best financial performance in a decade in the first half of fiscal 2000, with April-September pretax profits surging 207.1 percent to 130.69 billion yen. The automaker also posted consolidated net profits of 172 billion yen in the six-month period, a turnaround from net losses of 323.52 billion yen in the corresponding period of fiscal 1999.

Ghosn, sent in to shore up the ailing Nissan after French carmaker Renault AG took a roughly 36 percent stake in the firm, said the automaker’s return to significant profitability was the most impressive achievement of the year, noting, “This wasn’t obvious in the beginning of the year.”

The major factors behind Nissan’s pretax profit growth were its success in cost reduction and increased sales in the robust North American market. However, the continuing weakness of the euro, as well as the strong British pound, has been adversely affecting non-European automakers’ business in Europe.

Against this backdrop, Ghosn said the decision on whether Nissan will manufacture its new Micra, scheduled to be launched sometime after 2002, in Britain or elsewhere in Europe would be made next month.

The current model is assembled at Nissan’s production plant in Sunderland, northern England.

As Nissan’s exports to the euro zone have suffered seriously from the pound’s continued appreciation against the euro, Ghosn earlier this year stated that the automaker may consider producing its new Micra in Continental Europe, a comment that prompted British government officials to urge Nissan to stay in Sunderland.

“Sunderland is a very productive and well-organized Nissan plant,” Ghosn said. “But today, the United Kingdom is not the best manufacturing platform for the European market.”

A decision will be made by the end of 2001 on whether Nissan will enter the minicar market, Ghosn added.

In contrast, Nissan’s decision to establish a new plant in Mississippi for large pickup trucks, sport utility vehicles and minivans was made swiftly, as the profitability of such an investment was readily apparent given the solid demand for such vehicles, he explained.

“I want to make sure that we have a reasonable scheme to be profitable before we launch a plan,” Ghosn said. “It is extremely important for Nissan to see whether getting into the minicar market is profitable.”

Ghosn pointed out how the firm’s turnaround has boosted worker morale. Putting the automaker back on the right track under the Nissan Revival Plan has restored employees’ confidence and trust, he said.

“In the past, there were many attempts to revive Nissan, but they did not lead to significant and visible results. But now people can see the results coming and they can associate their efforts to these results, and that brings back confidence.

“We know there are many things that still must be achieved, but regaining confidence based on facts and figures we have shown so far is important,” he said. “I believe it will accelerate the implementation (of the restructuring plan) and results for the future.”